fbpx
Register Log-in Investor Type

News

Digital 9 buying Arqiva stake

Digital 9 Infrastructure has agreed the terms of an acquisition of a 48.02% voting stake in Arqiva Group Limited. The completion of the acquisition is subject to customary regulatory approvals, and it will be funded through a combination of £300m in cash and a £159.3m (not £135.5m – the two announcements this morning don’t tie up) non-recourse vendor loan note. The stake is being acquired from Canada Pension Plan Investment Board. The cash for the deal will come from existing cash resources and Digital 9’s revolving credit facility.

Arqiva is a UK-based data, network and communications service provider, the sole operator of digital terrestrial television and radio infrastructure in the United Kingdom and an Internet of Things (IoT) connectivity platform for utilities, including a smart water metering platform working at scale in the UK. Amongst others, it owns the following national UK infrastructure:

  • about 1,450 broadcast transmission sites
  • satellite ground infrastructure delivering 1,100 TV channels internationally to five continents, via 80 ground stations accessing over 30 third-party owned satellites.
  • a national IoT utilities connectivity platform enabling smart metering and more efficient network monitoring and management for utility companies. Over 12 million premises connect to Arqiva’s smart meter networks with 50 million data points delivered daily.

The valuation for the Acquisition has been based on the financial results of Arqiva as at 30 June 2021, being the latest audited accounts. At that date, the business reported a total EBITDA of £332.4 million and £1,878.3 million of net external debt.

An investment in Arqiva provides the company with an opportunity to benefit from:

  • further portfolio diversification;
  • significant and highly visible Sterling-denominated cash flow generation, part of which is regulated by Ofcom;
  • a weighted average contract length of about 8 years with inflation protection against 69% of revenues;
  • long-established customer relationships, and a high quality, blue-chip customer base including the BBC, ITV, Discovery, BT Sport, and Sky; and
  • an attractive and growing national IoT platform providing connectivity for utilities, connecting over 15 million business and consumer premises.

Following the investment about 43% of Digital 9 will be exposed to wireless networks, around 39% to data centres and 18% to subsea fibreoptic networks.

Fundraise

In addition to the deal announced today, the company has a near-term pipeline of approximately £510m and a total pipeline of approximately £2.4bn.

Digital 9 has announced the launch of a proposed placing and offer for subscription of new ordinary shares at a price to be determined by way of an accelerated bookbuild process but being no less than 110p per share. The net proceeds will be used to partly fund the acquisition and hence partly release the otherwise fully committed revolving credit facility, as well as for working capital purposes.

To bid in the bookbuild, professional (Qualified) investors should communicate their bid  (size and price to the nearest 0.5p) to their usual sales contact at J.P. Morgan Cazenove. The number of shares to be issued and the strike price will be agreed between J.P. Morgan Cazenove and the company following close of the placing at noon on 7 July 2022. The floor price of 110p represents a discount of 3.0% to the closing price of 113.4p on 24 June 2022 and a 5.1% premium to the 31 December 2021 NAV of 104.62p. The next dividend that the new shares will be entitled to will be the one payable in September.

To participate in the offer for subscription, investors should complete the application form on the company’s website at www.d9infrastructure.com, and return it either by email to dgi9Offer@Computershare.co.uk (only if paying via bank transfer or settling via DVP in CREST); or by post to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6AH (the “Receiving Agent”) so as to be received by the Receiving Agent by no later than 11.00 a.m. on 6 July 2022, together in each case with payment in full in respect of the subscription.

Investors that wish to offer to subscribe via their broker or platform may do so by requesting their broker or platform to offer to subscribe on their behalf, subject to the terms and conditions between the investor and their broker or platform.

There is a minimum subscription amount of £1,000 per applicant. The company reserves the right to scale back any order at its absolute discretion and may reject any application for subscription under the Offer for Subscription without giving any reason for such rejection. The Offer for Subscription is only being made in the United Kingdom and is capped at the Sterling equivalent of €8m. [a hang over from EU prospectus rules that the UK should scrap we think.]

Expected Timetable

The expected timetable for the Placing is as follows:

Placing and Offer for Subscription opens

27 June 2022

Offer for Subscription Closes

11.00 a.m. on  6 July 2022

Latest time and date for receipt of commitments under the Placing

12.00 p.m. on 7 July 2022

Announcement of the results of the Issue

7.00 a.m. on 8 July 2022

Admission of the New Ordinary Shares to trading and dealings commence

8.00 a.m. on 12 July 2022

Crediting of CREST stock accounts in respect of the New Ordinary Shares

12 July 2022

Where applicable, definitive share certificates despatched in respect of the New Ordinary Shares

week commencing 18 July 2022 (or as soon as possible thereafter)

DGI9 : Digital 9 buying Arqiva

previous story | next story

Leave a Reply

Your email address will not be published. Required fields are marked *

Please review our cookie, privacy & data protection and terms and conditions policies and, if you accept, please select your place of residence and whether you are a private or professional investor.

You live in…

You are a…